A self-insured person or company owns a pool of assets that covers any potential losses they experience, instead of relying on traditional insurance. This method is commonly used to cover health care costs for large companies, but can be applied to individual policies as well. For example, someone who owns an old car that has a low Kelley Blue Book value might choose to drop collision auto insurance coverage and self-insure by paying for repairs out of pocket.
Those who opt to be self-insured can typically expect lower insurance premiums, but they also carry the full burden of paying for any loss. This is why most experts recommend that everyone carry at least some level of insurance to protect against financial hardship in the event of a disaster.
The most common examples of self-insurance involve items that can be easily replaced, such as electronics and cars. Many people choose to raise the deductible on their auto insurance to lower their premium, and some individuals and families make a conscious decision to forgo extended warranties on big-ticket purchases.
It’s important to know that the rules and regulations around self-insurance aren’t the same as those of fully insured plans. For instance, an employee who has a fully-insured health plan through a large employer may be surprised to learn that their plan is actually self-insured—the insurance company on the ID card only handles claims management and network negotiations. This is often the case when a large employer uses a third-party administrator to manage their self-insured health care plan. самоосигуряващо се лице или фирма